The
definition of micro and small enterprises is still controversial and debating. There
is no generally accepted definition of micro and small enterprises. Micro and
small enterprises are different one country to other because one country small
enterprise may be medium enterprises in the other country. Many developing
countries apply based on specific parameters, which include factors such as the
number of employees, capital, asset, etc. The definition which is based on the
above criterion partially focuses on specific target groups for any
preferential treatment of the various actors in the MSE recognizing that, there
are no standard definitions of MSE. Thus, the definition of MSE depends on the
stage of economic development of the country.

 

According
Bolton Committee (1971), first a?economic? and ?statistical? definition of a small firm was formulated.
Under the ?economic? definition, a firm is said to be small if
it meets the following three criteria: relatively small share of their market
place, managed by owners or part owners in a personalized way, and not through
the medium of a formalized management structure; and independent, in the sense
of not forming part of a large enterprise. On the other hand, the ?statistical?
definition, the Committee proposed two criteria; size of the small firm sector
and its contribution to GDP, employment, exports, etc.; the extent to which the
small firm sector’s economic contribution has changed over time (Bolton, 1971)

 

The
sectoral classification has also used as criteria to define MSEs by Bolton
Committee. Accordingly, firms in manufacturing, construction and mining were
defined in terms of number of employees (in which case, 200 or less qualified
the firm to be a small firm), those in the retail, services, wholesale, etc.
were defined in terms of monetary turnover (in which case the range is
50,000-200,000 British Pounds tobe classified as small firm) whereas, firms in
the road transport industry are classified as small if they have 5 or fewer
vehicles (Bolton, 1971).